This Recent Stock-Split Just Hit a New All-Time High. Should You Buy This AI Cybersecurity Leader?

Core Insights - Palo Alto Networks has experienced significant growth, highlighted by a 2-for-1 stock split and strong Q2 FY 2025 results, with the stock reaching an all-time high [1][3] - The company operates primarily in two segments: a rapidly growing next-generation cybersecurity business and a legacy business focused on firewalls [2][4] - The next-generation business has shown remarkable growth, with annual recurring revenue (ARR) increasing by 37% year over year to $4.8 billion, outperforming competitor CrowdStrike [3] - The legacy business, while not growing as quickly, remains a substantial profit driver, contributing to an overall revenue increase of 14$2.3 billion [4] - The company is prioritizing market share over immediate profitability, with potential for operating margins to rise significantly in the future [5][6] Valuation Considerations - Palo Alto's stock is currently trading at a high price-to-earnings (P/E) ratio of 64 times forward earnings, indicating a premium valuation [7] - The price-to-sales (P/S) ratio stands at 17 times sales, which is relatively high compared to mature software companies like Adobe, which trades at 9.6 times sales [8] - Despite the premium valuation, the growth potential in margins and the next-generation cybersecurity business may justify the current stock price [9]